Back in the 1920s, the U.S. government thought blimps might be the next big thing in warfare. So the government started producing helium. And they created the Federal Helium Reserve, a vast store of helium that sits underground in the Texas panhandle.

The great blimp war never came to pass, but the reserve persisted. Now, the government is in the process of selling off the most of that helium and winding down the reserve. Weirdly, selling off all that helium has actually led to a big rise in the price of the gas.

This is a bigger deal than it might seem. Besides playing an essential role at birthday parties, helium is used to make cell phones, computers, plasma TVs — anything with a chip.

There is a private helium industry. But private producers are wary of expanding their business at a moment when the government is selling off its stockpile. These days, the government is selling enough helium to keep some private companies on the sidelines, but not enough to drive prices down.

At some point, the price of helium will rise enough to make it worthwhile for private companies to start producing more. This, in turn, should make prices stabilize.

But for now, companies that use helium are stuck, whether they're big global manufacturers making computer chips, or party planners buying balloons.

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Transcript

ROBERT SIEGEL, HOST:

There are certain things that people and companies buy, no matter how expensive they become - things such as gasoline or milk and, oddly enough, helium. But the price of helium has shot up.

And as Jess Jiang of our Planet Money team explains, it's a big problem for the economy.

JESS JIANG, BYLINE: To get to the bottom of why helium is so essential, I asked some balloon experts.

UNIDENTIFIED CHILD: I want to get a blue balloon. I want to get that balloon.

JIANG: This is four-year-old Wella Hampton Comb(ph) at a birthday in a place called ConstructionKids. The owner is Deb Windsor. Part of her business, hosting children's birthday parties.

JIANG: Last year, a tank of helium cost Deb $100. This year, $150, which means she has to be very careful when she's tying the balloon.

WINDSOR: Ooh, there goes a dollar. Poof, a dollar.

JIANG: But it's not just balloons that are going up in price. Helium is critical for making lots of things - cell phones, computers, plasma TVs, anything with a chip. So what's going on here? Why is the price of helium skyrocketing? Experts say that there's not a shortage of helium. They say the part of the problem is a government helium program that most people have never heard of, the Federal Helium Reserve. The U.S. government stores vast amounts of helium deep underground in the Texas Panhandle.

SAM BURTON: It has lots of wildlife, some mesquite scrub brush and it's very remote.

JIANG: Sam Burton is the field manager for the Federal Helium Reserve. The U.S. government started producing helium in the 1920s, you know, for dirigibles in case of a global blimp war. Over the decades, the government has been stockpiling helium in these tiny holes underground just outside Amarillo.

BURTON: One of the objectives of the helium operations is to provide a stable helium market.

JIANG: The problem is, the government has decided we don't need a strategic reserve of helium anymore. There are many private companies that make the U.S. the largest helium producer in the world. So the government is selling off almost all the helium is has stored. Now, you might think the U.S. government flooding the market with helium would drive prices down.

But Janie Chermak, a natural resource economist from the University of New Mexico, she says it's having the exact opposite effect. If you're a private helium producer and you see all that government helium on the market...

JANIE CHERMAK: It provides incentives to not put in a new facility or to delay a new facility.

JIANG: In other words, these private companies say to themselves, why should we dig up our own helium when the government is such a big producer? These days, the government is releasing just enough helium to keep some private companies on the sidelines, but just not enough to drive prices down. But Chermak says, if the price continues to rise, private companies will start producing helium.

CHERMAK: If the price is higher, basically that says the value of the good is higher. And so, a typical reaction would be for increased supply to be put into the market.

JIANG: But for now, companies that have to use helium, they're stuck, whether it's big global manufacturers making computer chips or party planners like Deb Windsor. On her last trip to her helium supplier, she asked about her other options.

WINDSOR: Is there anything else we can use, anything other?

UNIDENTIFIED MAN: You can use nitrogen but it's going to stay on the floor.

WINDSOR: Well, that's not very festive.

JIANG: For a lot of things, there's just no substitute for helium. Jess Jiang, NPR News. Transcript provided by NPR, Copyright National Public Radio.